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Asia's largest refinery, Sinopec Corp, will proceed with a 1,600-kilometre oil pipeline across southern provinces of China, although speculation continues to linger that the company will scrap the plan due to a postponement of the multi-million-dollar project.
China's top planning body, the State Development Planning Commission (SDPC), has generally agreed on the project after the refinery amended its proposal last year, according to a Sinopec representative responsible for the programme.
Initially costing US$420 million, the pipeline was going to run through Guangdong, Guizhou and Yunnan provinces to transport oil products from refineries in Guangdong to markets in southwestern provinces.
Construction was scheduled to start last year and take three years to complete, but final governmental approval is still needed. Earlier reports said the company would abandon its plan after it was rejected by the government because it was considered a duplication of a similar pipeline in the area belonging to rival PetroChina, China's largest oil company.
The reports shocked the market. About 70 percent of the project's investment, or 2.4 billion yuan (US$290 million),was raised by Sinopec on the domestic stock market last year.
Sinopec's representative denied the speculation, saying the delay has been caused by the company's revision of the plan to save on construction costs.
"We are optimizing the plan and will submit the feasibility study (of the project) to the SDPC for final approval this month," the representative said. "The construction can start after the study is approved."
The company has trimmed the investment by US$45.9 million, or 10 percent. An SDPC official, who refused to be named, told China Daily the commission has never said the construction of the pipeline was suspended.
Sinopec hopes the proposed pipeline can help cut costs of transporting oil products from its second biggest refinery in Maoming, in Guangdong Province, to markets in the southern regions. After starting operation, it is expected to each year send 10 million tons of oil products to the southern areas where no big refinery exists.
Sinopec's official said the pipeline is not a doubling-up of PetroChina's Lanzhou-Chengdu-Chongqing pipeline, which runs 1,250 kilometers from Northwest China's Gansu Province to Sichuan Province in the country's southwest.
"The two pipelines cover different markets," the official said.
PetroChina's pipeline was completed in July and has an annual capacity of 5 million tons. It is expected to expand to 10 million tons by 2005.
(China Daily September 3, 2002)
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